Jack Dorsey, founder of Twitter and current CEO of Block (which manages Square, Cash App and Tidal), has just done something that few CEOs dare to do: fire 40% of his employees at once, at a time when is making profits. The most curious thing is that its investors seem to agree with Dorsey’s decision and have celebrated it with a historic rise in the company’s shares.
Thus, Block will go from having more than 10,000 workers to just under 6,000. That leaves a balance of more than 4,000 layoffs in a single day. Dorsey does not hide: the official reason is increased productivity What artificial intelligence offers.
A 40% cut with benefits. Dorsey communicated his plans to lay off 40% of his staff through a post on Xand justified it as a proactive move, not a response to any financial problem. According to the CEO himself, the company is going through a good economic moment and is marking an upward path in profits. “We did not make this decision because we are in trouble. Our business is solid. Gross profits continue to grow, we continue to serve more and more customers and profitability is improving,” the CEO confirmed in his statement.
That is precisely one of the keys that it is marking the latest rounds of layoffs and it makes a big difference in terms of the traditional reasons why companies fired their employees. As its CEO points out, the layoffs are not the result of a financial crisis, but rather are due to the increase (or the promise of that increase). in productivity that AI automation brings. This technology allows do the same with less staff.
“We’re already seeing that the intelligence tools we’re building and using, along with smaller, flatter teams, are enabling a new way of working that fundamentally changes what it means to build and run a business. And that’s accelerating rapidly,” Dorsey wrote in his message.
Those laid off do not stay stranded. The more than 4,000 employees affected by the unexpected layoff will receive 20 weeks of base salary plus one additional week for each year of seniority in the company. According to collect Business Insideremployees affected by staff cuts They will be able to keep their corporate devices and will be given an additional payment of $5,000.
As Dorsey explained, they are aware that, in the short term, the layoffs were going to be irremediable, so instead of progressively reducing their workforce, they have chosen to cut short, avoiding smaller rounds of layoffs that damage the morale and focus of the staff and the trust of clients and shareholders. “I would rather take firm, clear action now and build from a position of belief than manage a slow downsizing toward the same outcome.”
Why now and why so many. According what was published by WiredBlock has been applying personnel cuts in different departments for months. The company had already laid off 931 employees in March 2025 and nearly 1,000 more jobs in January 2024.
One of the reasons behind these successive layoffs is the correction of overhiring during the pandemic, a correction that caused hundreds of thousands of layoffs among the main technology companies between 2022 and 2024. This is an argument that Dorsey has not deniedbut it does not stand out as the main trigger for layoffs, putting the target on the increase in productivity that AI provides.
Block surpassed 12,000 employees in 2022, in a stage of accelerated expansion that now, with AI tools integrated into the workflow, is impossible to justify. Block CFO Amrita Ahuja was quite blunt about it, ensuring that the layoffs will allow the company to move faster “with smaller, highly talented teams that use AI to automate more work.”
Investors applaud him. Block shares they were shot more than 24% after the announcement. This is the reflection of a dynamic that is becoming increasingly common in which investors reward with increases in share prices and massive layoffs as a sign of efficiency and modernization.
Michael Blank, associate professor of finance at Stanford Business School, explained to Business Insider that this dynamic could unleash a competition between CEOs of large companies to convince investors that their companies are better prepared than their rivals, thus turning massive layoffs into a tool to improve capitalization figures.
Block’s stock had been struggling for months before the announcement. According to data collected by Ad Hoc News In February, the stock was trading 21% below its start-of-year price and 37% below its 52-week high. In that context, Dorsey would have managed to kill two birds with one stone: reorganize his company towards a more AI-oriented model and relaunch investor confidence.
Doing more with less: the key to layoffs. With his decision, Dorsey has left a message that goes far beyond Block’s management itself, and proposes a change in the relationship between the number of people a company needs to do a job.
“It seems inevitable that this will spread to all publicly traded companies. We have to find a way for everyone to be an owner and have some exposure to the benefits, as the number of employees drops dramatically,” said Jessica Verrilli, CEO of the venture investment fund Adverb Ventures. in response to Dorsey’s post.
In the presentation of Block’s results, the CEO assured that the increase in AI productivity It inevitably led to staff cuts because fewer hands were needed to do the job. “I don’t think we’re the first to realize this. I think most companies are late,” collected Business Insider.
He’s not the only one who thinks so. Klarna CEO Sebastian Siemiatkowski has been running a similar strategy for years and, in a recent interviewassured that by 2030 his company will be able to do without 30% of the 3,000 employees who currently make up the payment platform’s workforce due to the increase in productivity provided by AI.
In Xataka | “The world is in danger”: Anthropic’s security manager leaves the company to write poetry
Image | TED
GIPHY App Key not set. Please check settings